Philippine central bank to take 'measured approach' in easing as inflation steadies

By Mikhail Flores

MANILA (Reuters) - The Philippine central bank will take a "measured approach" in easing policy rates, it said on Wednesday, as annual inflation held steady at 2.9% in January, staying within its target range.

The increase in the consumer price index (CPI) matched the previous month's rate, but it was higher than the 2.7% median forecast in a Reuters poll.

Last month's inflation was consistent with the central bank's view that inflation will stay within its 2% to 4% target for the year despite upside risks, the Bangko Sentral ng Pilipinas (BSP) said in a statement.

The BSP, which has flagged a fourth consecutive 25 basis point rate cut at its Feb. 13 meeting, said it will "maintain a measured approach to monetary policy easing to ensure price stability".

Core inflation, which strips out volatile food and energy prices, slowed to an annual 2.6% in January from 2.8% in December.

Food inflation, which accounted for nearly half of last month's CPI print, rose 4% year-on-year in January from 3.5% as higher vegetable prices offset the decline in rice prices.

Rice prices contracted 2.3% in January from December's 0.8 percent rise. It was the first time prices have contracted since December 2021, and that trend will likely persist until July, National Statistician Dennis Mapa told a briefing.

On Saturday, BSP Governor Eli Remolona said the central bank could cut its key policy rate, currently at 5.75%, by at least 50 basis points (bps) this year.

Remolona said a reduction in interest rates would support the economy, which grew a slower-than-expected 5.2% in annual terms in the last quarter of 2024.

(Reporting by Mikhail Flores and Karen Lema; Editing by John Mair and Raju Gopalakrishnan)